Kock Francis posted an update 4 months, 2 weeks ago
Traditional ERP Implementations
Traditional ERP implementations are extremely risky, for the partner deploying them and for the customer. For this reason no one supplies the elusive fixed fee. The risks are merely too much.
The existing Dynamics NAV project costs were high because legacy methods can be very expensive. The typical implementation follows numerous phases originally determined by Microsoft in the waterfall project framework. Waterfall project management is proven to become more costly compared to the modern “agile” approach, which can be depending on LEAN techniques.
The approach that has been employed by virtually everyone since ERP has been in existence is always to bill “Time and Material.” Which means that customers spend on the time spent by consultants, nomatter just how or bad they are. This moves the risk from the implentor to the customer almost entirely.
In fact you can still find massive risks for your partner using these waterfall projects. I’ve come across MANY cases where partners were sued or threatened when these projects go very badly.
I began thinking of the way you required to change this after reading a LinkedIn post that shared a piece of writing on why “Time and Material Billing is Unethical.” I had been really struck from the arguments. The writer asked a matter i think summed it down fantastically well:
In case a restaurant charged you for the time and material which it took to cook your steak, how do you feel?
This probably sparked my first real opinion of the way to stop like a time and material business.
ERP Pricing is incredibly unpredictable
The primary videos that we uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent time since working out ways to remove that inaccuracy.
Obviously the easiest method to give accurate estimates ended up being to be fixed fee. The trouble is that traditional approach is really dangerous to the partner. It makes it really scary to offer a fixed fee. if you do not do it right, you have a lot of trouble. We have worked very hard to develop a method that I think is exclusive.
Applying LEAN Thinking to ERP Implementations
There exists a movement to utilize LEAN thinking to service activities. Generally, LEAN is around removing waste from your physical product, but it can be applied to projects too.
I developed my own, personal variations of waste in ERP projects.
First – there exists time spent by the wrong resource.
This is typically when someone who is too expensive does something which somebody that pays significantly less can perform, or can do it faster.
Second – you’ll find unnecessary steps
I have found this occurs when we perform steps to “cover their butts.” Plenty of project management falls into this. It also happens when consultants (compensated on hours billed) push unnecessary work.
Third – you’ll find wasted tasks
Sometimes customers need to do issues that we, as ERP consultants, know will not work. Within a traditional implementation we’ve got no economic motivation to stop it.
Lastly – there’s a “bleed” of info
Rise around the customer. Typically it’s once the customer doesn’t remember their training as they do not invest some time in the device enough.
Why ERP Implementations Have to Change!
If we started doing cloud based ERP implementations with Microsoft Dynamics NAV it absolutely was common for clients to pay for $100,000 to the software and pay $200,000 for his or her implementation.
Once you enter in the arena of the cloud, where Microsoft Business Central is $100 each month per user, things change. It’s hart to tell a customer they’re going to spend $2000 monthly for software yet still pay $200,000 for implementation.
And then we did what our customers do. We set an amount we thought the market industry would support, and we worked backwards to regulate our internal costs and earn money doing that. Our company is manufacturing companies. They have to estimate a cost, then stick to it. They are unable to head to their customer and say “we have to bill you more because we had arrived inefficient in our production process.” They would close shop over night.
The brand new method of ERP implentations.
I’m more of a manufacturing expert than the usual technology expert. Few companies think in terms of projects with project managers (Engineer to buy may be the exception). They generally think in terms of operations managers and standard work instructions.
I applied this thinking to ERP projects. It may help that all carry out is implement ERP for manufacturers.
Here’s are the main steps that helped us dramatically reduce the risk (and expenses) of ERP projects.
We just do one kind of projectFocusing exclusively on manufacturing, plus small facilities, resulted in we could refine and acquire better with each and every project. We glance with the process as being a repetitive, repetable process. This process gets gone the at the start kind of the project plan etc. The project management disappears altogether, and that we reduce that waste enormously.
We offset easy but tedious attempt to the customerWhen a $200 by the hour consultant does what depends upon a clerical task, which is waste. We train the customers can use to perform some of the tedious tasks. Evidently sorts much better created by the customer. Business Central makes a lots of this easier since it has great tools for customers to perform tasks that was previously hard. There’s 2 of the particularly which might be key: Reports and knowledge Loading
We train people to edit formsCustomers know what they want their invoice to check like. They know where they want the deadline on their PO. It’s way easier if we guide them to change this stuff than do it for the kids.
We train visitors to load data into the systemData loading is really a task we assign to a co-op student right after hours training. The fact is, when customers “get” how this is done – they do a much better job cleaning their data and things go much smoother!
We keep workout sessions shorter and VideoPeople forget what they’re taught. It goes without saying of life. You do have a lot on your plate. Also, the more time an individual spends in training – greater they “zone out” and start to shed focus. We keep services short, and record these as videos. People absorb countless can simply review what they’ve got forgotten. What this means is we absolutely must train remotely. Travel time is really a killer (and totally waste)- and then we can’t travel.
We maintain the project tight, and discourage changeTraditional ERP partners encourage extra work. Remodeling means extra profit. Not for individuals. If we perform a Business Central project, we discourage any changes from your original project. Our projects aren’t super restrictive – however they do limit the features we’re going to implement in “Phase 1.” Keeping the master plan tight, there is lots less “creep” as well as the boss is often much happier.
We still bill for customizations, but discourage them also Customizations would be the one thing we simply cannot predict – and we all also discourage them. Given this new model, find customers require a lot fewer also. They trust us more to know what were doing. Occasionally a customization is only a no-brainer, along with those cases we support and in many cases encourage them. Nevertheless – we have fewer than half the customization we utilized to.
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